Electric tariff revised to attract private investors

The electricity Feed-in-Tariff proclamation that was expected to pass into law before the end of this year is going to be revised again, Capital learnt.
The new law which aims to encourage private investors to invest in producing renewable energy, has gone through many changes over its life time.

According to the original plan, the new Feed-in-Tariff proclamation was expected to pass into law during 2012 and to facilitate the large scale deployment of these technologies providing investment security and market stability for companies investing their money into generating power.
The Ethiopian Electric Agency,  which is the regulatory body for power and power related issues, supervise and ensure that the generation, transmission, distribution and sale of electricity are carried out in accordance with the Electricity Proclamation, is also the body responsible for revising the draft of the tariff law.
Wondimu Tekle, State Minister of the Ministry of Water and Energy (MoWE), told Capital that the Ministry has decided to revise the proclamation for final approval. Wondimu mentioned that the law could be approved by the parliament in this fiscal year.
He said that to meet the renewable power sector strategy, private sector involvement is a must “as a result, we have to amend the new tariff as soon as we can,” he added.  
Ethiopia has a potential to generate over 60,000MW of renewable energy, from which 45,000 MW is from hydro power. However, currently only 2,000 MW has been generated. Plans are in the works to increase this level of power generation fourfold by 2015.
The five year power sector development plan indicated that implementation strategies are to promote a mix of energy sources by developing renewable wind and geothermal resources, prevent power loss and promote proper utilization of energy, reduce unit cost of power generation investments and operation, and provide electricity at affordable prices.
“Implementation strategies will seek to meet increasing demand for energy by encouraging private investors to engage in the sector,” the government plan states. Actions taken to support this strategy include licensing applicants and granting certificates of competence to potential energy producers.
A further approach is to ensure that affordable tariff structures are applied. Energy audit activities will involve establishment of energy efficiency management sections for selected consumers, particularly high energy consuming organizations.
A study of requests for annual tariff revision by developers was carried out with the aim of establishing an economical and fair rate for electricity services, while at the same time encouraging investments. The study recommendations will be implemented following agreement and endorsement by the responsible authorities.
The measures to be taken will identify the most efficient energy consumption technologies, establish performance standards, implement and conduct regular inspection activities on electric utilities, prepare reports and take the corrective measures deemed necessary.
The Ethiopian Electric Agency is the relevant governmental authority that can give the right to private investors to develop and supply electric power. However several local and overseas companies secured their license from the agency and have undertaken preliminary studies on the project sites, there is no company that has gone further to develop the sector.
However, different stakeholders from the private sector have been complaining about the tariff rates in the bill claiming that it does not consider the investment cost of generating power and will not attract investors.
The tariff set by the government is one of the main reasons for companies to retreat from further investment. But the new revised tariff that will be ratified soon is expected to be economically attractive for private investors to actively engage in electric production which until now is mainly developed by the state utility Ethiopian Electric Power Corporation (EEPCo).